Crypto Mining Moratorium Imposed By New York’s Salamanca City

News, Regulation | August 13, 2018 By:

The city of Salamanca in the US state of New York has imposed a moratorium on cryptocurrency mining in the city.

Last week, the Common Council of Salamanca voted unanimously to approve Local Law No. 2 for 2018, which would temporarily stop applications or proceedings, or the issuance of approvals or permits, for crypto mining operations in the city’s “electric service area.”

Dennis Hensel, general manager of the Board of Public Utilities (BPU), said that the goal of the moratorium is to prevent people from setting up a cryptocurrency mining establishment within the borders of where the city provides electricity.

“This is a problem in a bunch of these municipalities that buy cheap electric from NYPA (New York Power Authority),” Hensel said. “This has been a problem ongoing since about 2014 and it’s just now reached us in New York.”

Hensel said that crypto mining activity is offsetting costs onto resident by guzzling the board’s reserve of cheap power and forcing it to buy extra, and more expensive, nuclear power for the region. He also claims that often remotely-managed “unchecked mining operations” have caused safety problems in other regions, including, “melted wires and transformers blowing up due to having the computers in small places like apartments with no one watching them.”

Timothy Flanigan, member of the City Council and the BPU, said that the BPU “does not yet have all the rules and regulations in place to properly deal with crypto operations.” Flanigan added that the moratorium buys the city time to get rules in place without a blow to the electric system.

“The thing that this [moratorium] will do is devoid people of using up all the residents’ power and effectively make all of them get a price increase on their utility bills because somebody else is using up all the cheap power,” Flanigan said.

In March of this year, the city of Plattsburgh, a tiny municipality in New York next to Niagara Falls, suspended bitcoin mining operations for 18 months “to allow the city of Plattsburgh the opportunity to consider zoning and land use laws and municipal lighting department regulations before commercial cryptocurrency mining operations result in irreversible change to the character and direction of the city.”

Last month, the New York State Public Service Commission (PSC) approved a new electricity rate structure for crypto miners that was proposed by the Massena Electric Department. Under the new rule, crypto miners will be eligible for service under an individual service agreement if their maximum demand exceeds 300 kilowatts, and the customer provide benefits to the utility.